University of Wisconsin - Madison
Institutional Affiliation: University of Wisconsin - Madison
NBER Working Papers and Publications
|September 2011||Comparison Friction: Experimental Evidence from Medicare Drug Plans|
with Jeffrey R. Kling, Sendhil Mullainathan, Eldar Shafir, Marian Wrobel: w17410
Consumers need information to compare alternatives for markets to function efficiently. Recognizing this, public policies often pair competition with easy access to comparative information. The implicit assumption is that comparison friction--the wedge between the availability of comparative information and consumers' use of it--is inconsequential because information is readily available and consumers will access this information and make effective choices. We examine the extent of comparison friction in the market for Medicare Part D prescription drug plans in the United States. In a randomized field experiment, an intervention group received a letter with personalized cost information. That information was readily available for free and widely advertised. However, this additional step--p...
Published: Quarterly Journal of Economics, 127:1 (February 2012), 199-235. citation courtesy of